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PCL Industries just paid (moments before time 0) an annual dividend of $1.95 per share that...

PCL Industries just paid (moments before time 0) an annual dividend of $1.95 per share that is expected to grow at a 2% annual rate. If the appropriate required return for this stock is 14%, how much should you be willing to pay for the stock today?

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Answer #1
Price = recent dividend* (1 + growth rate )/(cost of equity - growth rate)
Price = 1.95 * (1+0.02) / (0.14 - 0.02)
Price = 16.58
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